Wash sale interpretation

The moderator is of course correct, but I question the entire premise of the transaction.

If you don't actually want to be rid of the stock, why do you want to realize the gain and needlessly burn up loss? Remember, a capital loss is itself an asset, since it shields future gains and can offset up to $3000 of ordinary income. So why needlessly consume an asset?

Why not leave the stock alone and have a bigger loss carryover which will allow you to offset a future gain on the sale of some stock that you DON'T want to keep?

-- Rich Carreiro snipped-for-privacy@rlcarr.com

It sounds reasonable. If you have a stock that is dwindling in value and you think it will fall further, but will be good for the long term, you can sell it now and take your profits (which here will be used to offset other losses so there will be no tax due), then use that money to buy the shares back at a lower price.

That is somewhat reasonable. But IIRC the original poster was talking about selling and immediately repurchasing.

-- Rich Carreiro snipped-for-privacy@rlcarr.com

And the OP's sale/purchase was to capture a gain, not loss, so wash sale did not apply.

Joe

This whole thing makes no sense to me. I can find no reason why an individual who has already maxed out their capital loss deduction for the year would want to sell stock to create a gain to offset losses that can be used in the future. If you think the stock will continue to drop in price and you still want to own it, buy a Put.

Rich,

Your position was raised by Advisor B also. I can only add some details of my current situation, but it's not helping me arrive at a direction. Maybe it will ring some bells with you.

I'm already on SSDI, not working, and losing my LTD policy in January when I turn 65, so ordinary income is going to come down, not go up.

My current portfolio has taken a gigantic hit, and there are precious few securitites that have any profit at all. Advisor A did not, IMO, invest me wisely, irrespective of the global market decline, and none of his stock funds, or stock unit trusts have been in positive territory for more than about 10 minutes in the last 7 years. (His plan [balanced growth and income] sounded great at the time, and I knew I had no plan). A separate account that I have had at Fidelity is entirely in stock mutual funds held for decades. They were fine for years (not great, but acceptable), and now are either at losses or minimal gain. I have lost just about all my confidence in investing, either with advisors (aka brokers) or by myself and have little optimism that I am going to see such a recovery of my portfolio that I would have a gain of any magnitude in a finite period of time. Sorry for the pessimism but poor health and a diminishing nest egg combine to keep me from seeing the future as very bright. It makes me lean towards taking advantage of a known tax strategy now instead of carrying it forward for an indeterminate # of years into an unpredictable scenario.

One detail I do have to take care of is carefully anticipating capital gain distributions from all of the stock funds. I don't know whether people redeeming shares out of panic about the market increases or decreases the size of CG distributions, but some of my losses will be used up to cover whatever the latter amount to. If I want to do this move purely by the current numbers, I should really wait until I have a very close estimate of both gains and losses for the year, and that's a fine line to walk. And of course by then, who knows if i'll have any gain left to shelter :{

I appreciate your insights. I am trying to be as rational as I can, but am not feeling rational or objective about my investments. It also doesn't help to have two financial advisors give me conflicting information.

Thanks,

jo

jo